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On Thursday, May 21, one of the big three rating
agencies in the world, Standard & Poor's (S&P), released a change of credit
rating for Indonesia, from previously BB+ with a stable outlook, to BB+ with a
positive outlook. Thus in fact the rating remains the same, only it outlook has
changed to be better. Yet still, the investors respond to this news positively,
where the Jakarta Composite Index (JCI) closed up for the day despite had been
down for a moment in the morning. And on that Thursday, too, the foreign investors
recorded a net buy for the first time in the last few weeks (but they recorded another
net sell on Friday). The question might be, what is credit rating? And how it
affects the economy in Indonesia, especially JCI itself?

On last November 2014, I decided to buy shares in
the construction sector, in this case Nusa
Raya Cipta (NRCA) at an average price of Rp910 per share, because I see
that the sector would probably benefited from the plan of long-term
infrastructure development by President Jokowi, who was inaugurated just a
month earlier. Then why NRCA? Well, that's because, after taking into
consideration about 1. The fundamental/financial performance of the company,
both historically and its latest, as well as 2. The valuation of the shares (in
value investing of our style, we only look at these two things, and only after
that we look at the ‘prospects’), then NRCA is indeed the most sensible option
compared to seven other construction stocks that available in the market. More
details related to NRCA, read again its analysis here.

In recent months, the Indonesian economy at the
level of real sectors outstandingly experiencing bad periods. Some large
companies such as Astra International (ASII), Perusahaan Gas Negara (PGAS),
Gudang Garam (GGRM), Semen Indonesia (SMGR), until Jasa Marga (JSMR), all
recorded a decline in net income in the first quarter of 2015. While in the
smaller businesses, the condition is not much different. Here are some of the
'testimony' I collected from my entrepreneur friends in several cities in
Indonesia.

As you
know, currently
about 90% of listed companies on the Indonesia Stock Exchange has
released their
financial statements for the period of First Quarter
2015. The bad news, most of them had an unsatisfactory performance. Even reputable companies
like Astra
International (ASII) recorded a decline in profits of more than 15%, the
worst in the last 10 years. Seeing these facts, no wonder that in the past several days the Jakarta Composite Index
(JCI) fell by almost 7% (although it later rebound). Because I myself, if I own ASII or
other stocks whose company had a poor performance, I would certainly going to sell it.